THE PRESIDENT: Good morning. This week, we learned of another
deeply troubling accounting scandal at a major American corporation.
Reports allege that the company hid nearly $4 billion in expenses, and
reported profits when it may have actually lost more than a billion
dollars. The Securities and Exchange Commission immediately filed suit
against the company to preserve documents, so that a complete and
thorough investigation can take place, and to ensure that the company
cannot give massive payments to executives during the investigation.

Despite recent abuses of the public's trust, our economy remains
fundamentally sound and strong, and the vast majority of businesspeople
are living by the rules. Yet, confidence is the cornerstone of our
economic system, so a few bad actors can tarnish our entire free
enterprise system. We must have rules and laws that restore faith in
the integrity of American business. The government will fully
investigate reports of corporate fraud, and hold the guilty parties
accountable for misleading shareholders and employees. Executives who
commit fraud will face financial penalties, and, when they are guilty
of criminal wrongdoing, they will face jail time.

In March, I unveiled a ten-point plan designed to enhance the
economic security of Americans by providing better information to
investors, making corporate officers more accountable, and delivering a
stronger, more independent auditing system. Among other measures, the
plan would give the Securities and Exchange Commission two critical
tools to hold corporate officers accountable.

First, corporate officers who personally benefit from false
accounting statements should lose all the money gained by their fraud.
An executive whose salary or bonus is tied to his company's performance
makes more money when the company has done well. That is fair when all
of the accounting is done above board. Yet, when bad accounting
practices make the company appear to be more successful than it
actually is, corporate executives should lose their phony profits
gained at the expense of employees and stockholders.

Second, corporate leaders who violate the public's trust should
never be given that trust again. The Securities and Exchange
Commission should be able to punish corporate leaders who clearly abuse
their powers by banning them from ever serving again as officers or
directors of publicly held corporations.

Since my call for action, the Securities and Exchange Commission
has sought to take away the profits of senior executives from four
different companies, and in this year the SEC has sought to bar 54
officers and directors. On Thursday, the SEC ordered the CEOs and CFOs
of the 1,000 largest public companies to certify that the financial
information they submitted in the last year was fair and accurate.

In addition to bringing a new measure of accountability to American
businesses, my administration is committed to protecting the retirement
savings of American workers. The plan I unveiled in February would
give workers greater freedom to diversify and manage their own
retirement funds. It would ensure that corporate executives are held
to the same restrictions as workers during blackout periods, when
employees are prohibited from trading in their accounts. It would give
workers quarterly information about their investments. And it would
expand workers' access to investment advice. These measures should
give American workers confidence that their investments will not fall
prey to unethical executives.

America is ushering in a new era of responsibility, and that ethic
of responsibility must extend to America's boardrooms. I want every
American to know that the vast majority of businesspeople are honest
individuals who do right by the employees and their shareholders. The
unethical actions of a few should not be allowed to call into question
our whole free enterprise system.

No violation of the public's trust will be tolerated. The federal
government will be vigilant in prosecuting wrongdoers to ensure that
investors and workers maintain the highest confidence in American
business.